Unifying Science and Spirituality

Tag Archives: fraud

In watching the Republican Tax Deform bill works its way through the institutional process, I can’t help but see trolling in play.

Online, a “troll” has been determined to be a person that understands human psychology, and uses it to disrupt functioning social systems. They have all the tools necessary for compassionate engagement, but choose to use them to cause fear and pain.

You see this in the tax bill crafted by Ryan and McConnell. After accounting for the additional $1.5 trillion in debt that will accrue to the public during the lifetime of the program, only the rich will benefit from the bill.

Every successful troll claims a beneficial intent, and we see this advancing in the Republican policy program. Ryan and McConnell want to create a fiscal crisis so that they have a remit to cut middle-class entitlement programs such as Social Security and Medicare. This is a program that has been pursued by the Republican Party since the Reagan era. America’s $20 trillion public debt was amassed due to tax cuts for the rich advanced during eras of Republican control. They created the public debt, and now claim it as the reason to cut benefits established and paid for by the middle class.

To understand why these trolls are not exposed, we have to understand who benefits from their strategy. It is the financial system. Large money-center banks suck at the teat of government debt. They profit every time a government bond is sold and redeemed – and long-term deficits means that those redeemed must be replaced by new. They profit from fiscal irresponsibility in Congress. The same is true of our trade deficit: every time an American buys a Chinese product, dollars must be converted to yuan, which flow overseas and then come back to America as dollars that buy our government debt. Every step in that process makes money for the financial industry.

What should be alarming is that profits enjoyed by the financial industry accrue from the exchange of dollars that does not add value to our economy. The value of the dollars does not change – they simply move from place to place.

Wall Street is effectively a tax on Main Street.

What is painful is to realize how deeply this psychology has migrated downward into our economy. Payday lenders make short-term loans against future earnings, sometimes charging as much as 1/3 of the loan value for bridge financing that lasts only a week. In Kansas, the most successful franchise (raking in billions of dollars in profits) was started by three brothers that claimed Native American sovereignty to get around state regulations that prohibited predatory practices. Eventually, the FBI stepped in to tear down their empire. But as the empire collapsed, the remaining brother took the protected financial data and created a list of fake debt claims that were then sold on to the debt collection industry.

Yes, many debt collectors are no longer paid by claimants. They actually pay for debt listings, and do little to verify the validity of the claims. The Tucker family made millions by selling the fake debt claims to multiple debt collectors. Those debt collectors had mouths to feed and mortgages to pay, and the only way to make good on their investment was to get money out of the people whose private financial information they had acquired. The FBI is now investigating the abusive practices of the collectors working against those false claims.

The abusive behaviors of the financial system, libertarian politicians and online trolls are linked by another factor: their behaviors harm people that they don’t know personally. Safely at a distance, trolls reach out through our communications infrastructure to wreak havoc in the lives of their victims. The don’t have to confront the mounting desperation of individuals and communities ground down by their hunger for money or power. They simply acquire wealth that they use to finance the careers of politicians that oppose regulation of their industry.

This is what makes men like Paul Ryan so pitiful. They believe that they must be doing something good because people tell them that they are taking on a problem that poses an existential threat to our country: the federal debt. But the people that applaud his determination are those that engineered the creation of that debt, and that benefit most from its existence. The true motivations for their investment in politicians such as Ryan is to ensure that their wealth is protected when the system collapses.

Trembling underneath this juggernaut of debt, there are those in American commerce that still believe in producing goods for consumption, and that compete to create value for their customers. Working in the automation industry, I am conscious that the work that I do displaces workers, creating distress from a distance much as does the financial industry. But being involved with the creation of goods and services, I do feel the pulse of that part of the economy.

The mantra that is evolving is hopeful. On the surface, that is hard to see: robots are displacing blue-collar workers, and artificial intelligence is threatening knowledge workers. What remains for people to do, then, is to ensure that customers are happy and successful, building a base for repeat business.

In other words, while the masters of the universe troll society, on the ground people are focused on learning to care for each other.

At the Reagan Presidential Library, a plaque commemorating T. Boone Picken’s financing of the Air Force One hall also recounted his influence over Reagan’s financial policy. He had apparently explained to the President that “like Eastern Europe, money should be free.” One manifestation of that policy was the deregulation of the Savings and Loan industry. What had once been a sleepy industry used by the middle class to finance home purchases and college education became a cash cow for some of the nation’s most imaginative financial schemes.

The details of the ensuing Savings and Loan disaster invoked justifiable moral outrage. At the same time that the industry was liberalized, Reagan cut the regulators responsible for monitoring the industry. This meant that two banks in Colorado could trade an undeveloped property back and forth, increasing the purchase price each time, and treat the land as an asset to secure loans for ten times the final purchase price. When the banks went under, it was the government that was obligated for covering the depositor’s losses.

This pattern was paralleled in the history of the hedge fund industry and the mortgage arbitrage disasters of the 1990’s and 2000’s. Industry professionals lobbied extensively against regulation, citing the power of innovative methods to reduce overall financial risk. In both cases, the sense of security encouraged risk-taking at unprecedented levels, until major players in the market collapsed.

In all cases, it was the public that bailed out the industry, not just through tax receipts, but also through the release of trillions of dollars in low-interest or no-interest money to the financial industry through the Federal Reserve. This is money that the government must nominally pay interest on through the promissory note mechanism. Through that method, the nation’s money supply is issued by private money-center banks, and the government pays interest to the banks for the privilege. Is it any wonder that the financial industry accounted for 50% of corporate profits in the year immediately following the 2008 mortgage disaster?

The recent disasters reflect a more dangerous trend: the complexity and speed of modern market mechanisms make it almost impossible for either regulators or consumers to assess the nature and value of the services provided. The use of complexity to defraud consumers was most visible in the health insurance industry. The availability of health care outcome data allowed new players to enter the insurance market and target only those subscribers least likely to need health care. Obviously, these subscribers were those that in their prior plans funded the claims of patients needing extended services. As they were siphoned away, existing health plans went into the red, and premiums skyrocketed. A large number of chronically ill patients fell out of the pool of insured, and their conditions worsened. To ensure access to a doctor, they began to lie on their health insurance applications. Carrying an insurance card, they would then be admitted to a hospital, which by law could not discharge them until their condition was stable. The hospitals would find out after the provision of services that the patient was not covered, and would have to pass the unrecouped billings on to regular patients, which drove up their premiums. And on the insurer’s side, a whole army of bureaucrats was hired with the goal of finding cause to deny coverage. Thus the system was further burdened with administrative costs.

The net result was that, prior to the Health Care Affordability Act, health insurance was on its way to being a “pay-as-you-go” system with enormous administrative overhead. The rational choice for those that could finance their own care was to be uninsured.

The complexity of market mechanisms also played a large part in the Enron fraud in the California electrical supply market, which saw traders calling up friends at power plants to take generators off-line during brownouts to create leverage over state regulators. It also was a major factor in the Madoff financial fraud.

If the myth of efficiency and rationality in financial markets wasn’t bad enough, the pathological influence of the philosophy has extended to the provision of basic public services. When workloads at forensic laboratories exploded with the war on drugs, private contractors stepped in, claiming that they could adapt more rapidly to the increasing work load. What has become apparent as these laboratories entered the Physician Health Plan market is that they have accomplished higher throughput by cutting corners on procedures. The profit motive drives all other factors aside. As those profits grow, these providers have used their resources in the political arena to generate legislation that opens new markets for their services.

What is truly frightening in this last case is that the failure to adhere to scientifically defensible practices has made the public at large responsible for huge claims for wrongful incarceration. Prior to privatization, local law enforcement had some visibility and control of the forensic laboratories. Now they are completely beholden to them, and the possibility of class-action civil lawsuits brought for lost income and privileges during incarceration makes disciplining the contractors unpalatable.

So I see patterns emerging, and those patterns all point in the same direction: siphoning of resources from the public to those with control of the nation’s financial and social infrastructure.

What is the impact on the spiritual plane? I’ll offer an experience I had in the aftermath of 9/11. I was struggling with fear in an intimate, and decided to go spelunking one night to find out what was driving their anxiety. After plunging through their personal fears, I found myself on a wavelength of fear that had as a fog enveloped the entire nation. Curious, I put my psychic mitts under it and lifted it up to look around. When I let go, it fell back down to earth.

What is the solution? As an act of will, stop being afraid. Love those that are close to you. Recognize that the financial elites, as always, are divorcing themselves from the reality that sustains them, and will fall when we organize ourselves around relationships that create value, rather than relationships that promise us security.

And seriously consider whether God isn’t a key asset of that discipline.